Trinity Capital Inc. Reports Fourth Quarter and Full Year 2022 Financial Results
Trinity Capital reported strong financial performance for Q4 and FY 2022. Total investment income increased by 75.8% YoY to $41.5 million in Q4, and net investment income rose 103.8% YoY to $21.6 million, or $0.62 per share. The company declared a dividend of $0.61 per share, supported by a 135% coverage ratio from NII. Despite a decrease in net asset value (NAV) to $13.15, Trinity maintained a robust investment portfolio valued at $1.09 billion. The company achieved a record $975.5 million in new commitments throughout the year. However, unrealized depreciation of $13.6 million and net realized losses of $9.6 million were noted, primarily affecting two portfolio companies.
- Total investment income increased by 75.8% YoY to $41.5 million in Q4 2022.
- Net investment income rose 103.8% YoY to $21.6 million, or $0.62 per share.
- Dividend distribution of $0.61 per share covered by NII at 135%.
- Record commitments of $975.5 million and fundings of $631.2 million for FY 2022.
- Investment portfolio valued at $1.09 billion, reflecting a 5% increase.
- Earnings spillover of $60.4 million or $1.73 per share to support future dividends.
- Net asset value per share decreased to $13.15 from $13.74.
- Net unrealized depreciation of $13.6 million attributed to specific markdowns.
- Net realized losses of approximately $9.6 million in Q4 2022.
PHOENIX, March 2, 2023 /PRNewswire/ -- Trinity Capital Inc. (Nasdaq: TRIN, TRINL) ("Trinity" or the "Company"), a leading provider of diversified financial solutions to growth-stage companies, today announced its financial results for the fourth quarter and year ended December 31, 2022.
Fourth Quarter 2022 Highlights
- Total investment income of
$41.5 million , an increase of75.8% year-over-year - Net investment income ("NII") of
$21.6 million , or$0.62 per share, an increase of103.8% year-over-year - Aggregate debt and equity investment commitments of
$239.5 million - Total gross investments funded of
$120.8 million , comprised of$70.4 million across seven new portfolio companies and$50.4 million across nine existing portfolio companies 17.9% Return on Average Equity "ROAE" (NII/Average Equity)7.7% Return on Average Assets "ROAA" (NII/Average Assets)- Debt principal repayments of
$53.0 million , including$14.8 million from early repayments - Investment portfolio of
$1.09 billion at fair value, an increase of5.0% from Q3 2022 - Net asset value ("NAV") per share decreased to
$13.15 from$13.74 on September 30, 2022 - Declared a dividend distribution of
$0.61 per share, consisting of a regular dividend of$0.46 per share and a supplemental dividend of$0.15 per share. NII covered the regular dividend by135% - Entered into a joint venture agreement, providing
$150.0 million of additional equity capitalization for co-investing alongside Trinity - Received exemptive relief from the SEC for establishment of a Registered Investment Adviser ("RIA") to be wholly owned by Trinity
"Trinity had a year of exceptional growth, furthering its momentum in 2022," said Steve Brown, Chairman and Chief Executive Officer of Trinity. "Our operating performance generated a record
Brown concluded, "Our outstanding performance has allowed us to increase our dividend for eight straight quarters, resulting in gross dividends of
Full Year 2022 Highlights
- Total investment income of
$145.5 million , an increase of77.0% year-over-year - Net investment income of
$71.6 million , or$2.26 per share, an increase of83.6% year-over-year - Net realized gains of
$32.9 million , or$0.94 per share based on shares outstanding at Q4 2022 - Total gross investments funded of
$631.2 million , an increase of13.0% year-over-year - Net investment portfolio growth at cost of
$355.7 million , an increase of44.6% year-over-year - Distributed
$2.33 per share in the form of regular and supplemental dividends, an increase of84.9% year-over-year - Undistributed earnings spillover of
$60.4 million , or$1.73 per share, based on shares outstanding at Q4 2022 - Announced key industry hires to build Trinity's life sciences financing vertical
"Trinity is operating on all cylinders. We have a healthy portfolio, solid balance sheet and ample liquidity heading into 2023," said Kyle Brown, President and Chief Investment Officer of Trinity. "With the goal of becoming one of the premier venture growth lending platforms in the world, our focus remains on building an investment portfolio that continues to generate strong returns for our shareholders in all economic environments."
Fourth Quarter 2022 Operating Results
For the three months ended December 31, 2022, total investment income was
Total operating expenses, excluding interest expense, for the fourth quarter of 2022 were
Net investment income was approximately
Net unrealized depreciation of
Fourth quarter 2022 net realized loss on investments was approximately
Fourth quarter 2022 net decrease in net assets resulting from operations was
Trinity's higher weighted average share count for the fourth quarter and full year of 2022 as compared to the same periods in the prior year is the result of approximately 6.9 million shares of common stock issued in connection with overnight offerings in 2022, approximately 364,000 shares issued under the dividend reinvestment plan and ATM program and approximately 665,000 net shares issued in connection with restricted stock awards, offset by approximately 186,000 shares repurchased in the fourth quarter of 2022 under the Company's stock repurchase program.
Net Asset Value
As of December 31, 2022, total net assets decreased to
Portfolio and Investment Activity
As of December 31, 2022, Trinity's investment portfolio had an aggregate fair value of approximately
During the fourth quarter, the Company originated approximately
Proceeds received from repayments of the Company's debt investments during the fourth quarter totaled approximately
As of the end of the fourth quarter, loans to two portfolio companies and equipment financings to two portfolio companies were on non-accrual status with a total fair value of approximately
The following table shows the distribution of the Company's loan and equipment financing investments on the 1 to 5 investment risk rating scale at fair value as of December 31, 2022 and September 30, 2022 (dollars in thousands):
December 31, 2022 | September 30, 2022 | |||||||||||
Investment | Designation | Investments at | Percentage | Investments at | Percentage | |||||||
4.0 - 5.0 | Very Strong Performance | $ | 2,729 | 0.3 % | $ | 92,008 | 9.2 % | |||||
3.0 - 3.9 | Strong Performance | 239,872 | 22.9 % | 320,087 | 32.1 % | |||||||
2.0 - 2.9 | Performing | 756,596 | 72.1 % | 537,260 | 53.9 % | |||||||
1.6 - 1.9 | Watch | 39,315 | 3.7 % | 38,484 | 3.9 % | |||||||
1.0 - 1.5 | Default/Workout | 10,317 | 1.0 % | 9,339 | 0.9 % | |||||||
Total | $ | 1,048,829 | 100.0 % | $ | 997,178 | 100.0 % |
As of December 31, 2022, the Company's loan and equipment financing investments had a weighted average risk rating score of 2.8 as compared to 2.9 as of September 30, 2022. Trinity's grading scale is comprised of numerous factors, two key factors being liquidity and performance to plan. A company may be downgraded as it approaches the need for additional capital or if they are underperforming relative to their business plans. Conversely, they may be upgraded upon a capitalization or if they are exceeding their plan. As such, the overall grading may fluctuate quarter-to-quarter.
Stock Repurchase Program
On November 14, 2022, Trinity announced that its Board of Directors authorized a program for the purpose of repurchasing up to
Accretive Growth Announcements
On December 6, 2022, Trinity announced that it entered into an agreement to co-manage a newly formed joint venture, i40, LLC (the "JV"), that will invest in loans and equipment financings to growth-stage companies that have been originated by Trinity. The initial capital commitment to the JV is
On December 14, 2022, Trinity announced it was granted exemptive relief from the SEC that permits the Company to organize, acquire and wholly own a portfolio company that intends to operate as an investment adviser registered under the Investment Advisers Act of 1940.
Liquidity and Capital Resources
As of December 31, 2022, the Company had approximately
As of December 31, 2022, Trinity's leverage was approximately
Distributions
On December 15, 2022, the Company's Board of Directors declared a regular and supplemental dividend totaling
Conference Call
Trinity will hold a conference call to discuss its fourth quarter and full year 2022 financial results at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Thursday, March 2, 2023.
To listen to the call, please dial (800) 225-9448, or (203) 518-9708 internationally, and reference Conference ID: TRINQ422 if asked, approximately 10 minutes prior to the start of the call.
A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for seven days. To access the replay, please dial (800) 934-3336 or (402) 220-1148.
About Trinity Capital Inc.
Trinity Capital Inc. (Nasdaq: TRIN and TRINL), an internally managed business development company, is a leading provider of diversified financial solutions to growth-stage companies with institutional equity investors. Trinity Capital's investment objective is to generate current income and, to a lesser extent, capital appreciation through investments including term loans, equipment financings and equity-related investments. Trinity Capital believes it is one of only a select group of specialty lenders that has the depth of knowledge, experience and track record in lending to growth stage companies. For more information, please visit the Company's website at www.trinitycap.com.
Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties, including the impact of the COVID 19 pandemic on the economy, financial markets, our business, our portfolio companies and our industry. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission ("SEC"). The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release. More information on risks and other potential factors that could affect the Company's financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or on the webcast/conference call, is included in the Company's filings with the SEC, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed annual report on Form 10-K and subsequent SEC filings.
TRINITY CAPITAL INC. Consolidated Statements of Assets and Liabilities (In thousands, except share and per share data) | |||||
December 31, | December 31, | ||||
2022 | 2021 | ||||
ASSETS | |||||
Investments at fair value: | |||||
Control investments (cost of | $ 37,313 | $ 32,214 | |||
Affiliate investments (cost of | 1,528 | 32,192 | |||
Non-control / Non-affiliate investments (cost of | 1,055,545 | 809,064 | |||
Total investments (cost of | 1,094,386 | 873,470 | |||
Cash and cash equivalents | 10,612 | 31,685 | |||
Restricted cash | — | 15,057 | |||
Interest receivable | 9,971 | 5,551 | |||
Deferred credit facility costs | 2,903 | 2,308 | |||
Other assets | 8,567 | 9,047 | |||
Total assets | $ 1,126,439 | $ 937,118 | |||
LIABILITIES | |||||
KeyBank Credit Facility | $ 187,500 | $ 81,000 | |||
2025 Notes, net of | 178,552 | 121,384 | |||
August 2026 Notes, net of | 122,897 | 122,321 | |||
December 2026 Notes, net of | 73,526 | 73,158 | |||
Convertible Notes, net of | 48,118 | 47,485 | |||
Credit Suisse Credit Facility | — | 10,000 | |||
Distribution payable | 21,326 | 9,803 | |||
Security deposits | 15,100 | 10,840 | |||
Accounts payable, accrued expenses and other liabilities | 19,771 | 14,594 | |||
Total liabilities | 666,790 | 490,585 | |||
NET ASSETS | |||||
Common stock, | 35 | 27 | |||
Paid-in capital in excess of par | 480,532 | 368,609 | |||
Distributable earnings/(accumulated deficit) | (20,918) | 77,897 | |||
Total net assets | 459,649 | 446,533 | |||
Total liabilities and net assets | $ 1,126,439 | $ 937,118 | |||
NET ASSET VALUE PER SHARE | $ 13.15 | $ 16.40 |
TRINITY CAPITAL INC. Consolidated Statements of Operations (In thousands, except share and per share data) | |||||||||||||
Three Months Ended | Year Ended | Year Ended | |||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||
INVESTMENT INCOME: | |||||||||||||
Interest income: | |||||||||||||
Control investments | $ | 1,007 | $ | 578 | $ | 5,418 | $ | 5,242 | |||||
Affiliate investments | — | 254 | 862 | 1,607 | |||||||||
Non-Control / Non-Affiliate investments | 39,593 | 20,677 | 132,556 | 69,778 | |||||||||
Total interest income | 40,600 | 21,509 | 138,836 | 76,627 | |||||||||
Fee income: | |||||||||||||
Non-Control / Non-Affiliate investments | 909 | 2,098 | 6,664 | 5,565 | |||||||||
Total fee income | 909 | 2,098 | 6,664 | 5,565 | |||||||||
Total investment income | 41,509 | 23,607 | 145,500 | 82,192 | |||||||||
EXPENSES: | |||||||||||||
Interest expense and other debt financing costs | 10,284 | 6,241 | 34,148 | 20,394 | |||||||||
Compensation and benefits | 6,543 | 4,475 | 27,189 | 15,518 | |||||||||
Professional fees | 1,129 | 688 | 4,113 | 2,667 | |||||||||
General and administrative | 1,520 | 1,372 | 6,075 | 4,326 | |||||||||
Total expenses | 19,476 | 12,776 | 71,525 | 42,905 | |||||||||
NET INVESTMENT INCOME/(LOSS) BEFORE TAXES | 22,033 | 10,831 | 73,975 | 39,287 | |||||||||
Excise tax expense | 402 | 255 | 2,389 | 255 | |||||||||
NET INVESTMENT INCOME | 21,631 | 10,576 | 71,586 | 39,032 | |||||||||
NET REALIZED GAIN/(LOSS) FROM INVESTMENTS: | |||||||||||||
Control investments | (3,877) | — | (4,210) | (2,725) | |||||||||
Affiliate investments | — | 668 | (10,241) | 2,159 | |||||||||
Non-Control / Non-Affiliate investments | (5,694) | 6,784 | 47,304 | 13,274 | |||||||||
Net realized gain/(loss) from investments | (9,571) | 7,452 | 32,853 | 12,708 | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) FROM INVESTMENTS: | |||||||||||||
Control investments | 12,174 | 483 | 719 | 1,570 | |||||||||
Affiliate investments | (7,841) | (2,250) | (17,635) | (16,415) | |||||||||
Non-Control / Non-Affiliate investments | (17,980) | 38,849 | (117,898) | 95,425 | |||||||||
Net change in unrealized appreciation/(depreciation) from investments | (13,647) | 37,082 | (134,814) | 80,580 | |||||||||
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (1,587) | $ | 55,110 | $ | (30,375) | $ | 132,320 | |||||
NET INVESTMENT INCOME PER SHARE - BASIC | $ | 0.62 | $ | 0.39 | $ | 2.26 | $ | 1.50 | |||||
NET INVESTMENT INCOME PER SHARE - DILUTED | $ | 0.57 | 0.38 | $ | 2.14 | $ | 1.45 | ||||||
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - BASIC | $ | (0.05) | $ | 2.03 | $ | (0.96) | $ | 5.09 | |||||
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE - DILUTED | $ | (0.05) | $ | 1.83 | $ | (0.96) | $ | 4.64 | |||||
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC | 35,131,465 | 27,201,085 | 31,672,089 | 25,980,797 | |||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED | 38,649,085 | 30,540,885 | 35,189,709 | 29,320,597 |
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SOURCE Trinity Capital Inc.
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